Spanish Inflation Drops More Than Forecast as Recession Deepens

By Angeline Benoit -
Jan 31, 2013

Spanish inflation slowed faster than
economists expected in January as the recession in the euro
region’s fourth-largest economy deepened.

Consumer prices, based on European Union calculations, rose
2.8 percent from a year earlier, the National Statistics
Institute in Madrid said today. That’s the slowest pace since
August and less than the 3.1 percent increase economists
predicted, according to the median of 12 estimates in a
Bloomberg News Survey. Spain’s national inflation measure showed
a 2.6 percent gain.

The European Commission said this week it’ll reassess
Spain’s deficit targets next month after its economy entered a
fifth year of recession. Prime Minister Mariano Rajoy’s
government is struggling to tackle the second-largest budget
shortfall in the euro region, along with Greece’s, amid
unemployment at 26 percent.

Spanish inflation slowed to 2.4 percent last year from 3.1
percent in 2011, INE said this week. Inflation stripped of the
impact of tax increases averaged 1.7 percent. In December, that
measure was 0.9 percent, while inflation also excluding fresh
food and energy stood at 0.2 percent, according to the Spanish
measure. January details will be published on Feb. 15.